Business
2016-04-22
Executive Summary 3
I. Business description 4
II. Definition of the market 5
III. Description of proposed products or services 6
IV. Organization and management descriptions 7
V. Marketing strategy 10
VI. Financial management 12
References 14
Appendix A. 15
Executive Summary
This paper presents the business plan of the online-store. It specializes in the sales of different kinds of tea with home delivery throughout the country. The name of a start-up of the retail online store is “Black & Green”. The main objectives, which the store faces today, are the following:
the launching web site http://blackgreen.us;
The motto of the startup is: “You are what you drink”. In this case, the strategy of the start-up aims to increase the popularity of the natural leaf tea among Americans that is part and parcel of the healthy lifestyle. To succeed in the chosen business the online-store must:
sell a broad range of high quality products (middle and high price segment);
provide for the satisfaction all the customers;
develop the website through the own blog, contextual advertising, social networks and other promotions.
Starting an Entrepreneurial Business
Business description
The main goal of the retail online store “Black & Green” is to effectively serve customers in order to satisfy their needs in tea and additional goods. The strategy of “Black & Green” is based on the use of information and communication technologies, which can provide the interaction with customers and the seller in order to get a profit. The model of the online-store is presented in the figure 1.
As we can see, online-store performs the function of an intermediary. An important and mandatory component of the proposed online-store is the system of electronic payments. In this case, the bank becomes the one of the participants in this system.
The main features of the online-store are the following:
ordering from catalogs and price lists (bookings are stored in a single database);
internet connection is the main condition in order to manage the business;
self-registration of users on the website;
support both local and remote administration;
the possibility of online sales of goods throughout the country;
processing of orders by the standard scheme (registration, delivery, reporting and financial documents);
carrying out on - line payments.
The main advantages of the proposed start-up are as follows:
firstly, online-store specializes in the sales of best quality goods. It can help to increase the popularity of the online-store among the target audience and attract a huge number of customers with high paying capacity;
secondly, the company plans to cooperate only with well-known Chinese suppliers in order to minimize cases of fakes. The company’s products are offered for sale directly from Chinese suppliers without intermediaries. Thus, the protection against counterfeiting is provided by almost 100%. Buying a variety of products in the store “Black & Green” each buyer receives a guarantee of authenticity and quality of all products. An environmental safety also plays an important role: all products of the company “Black & Green” are environmentally friendly;
online shopping saves the customer time and money: the buyer does not need to spend time searching for the necessary tea / gift / tea utensils. The customers can simply order necessary products through the website with home delivery throughout all the country.
Definition of the market
During the last years, the tea industry has received the boost due to the popularization of the health and wellness trends in the American society. For example, the volume of sales of the herbal/traditional tea has grown by 13% in 2015 and has reached 2 800 tons (Tea Association of the U.S.A. Inc, 2016). Herbal teas become more attractive for customers due to their healthful properties (Euromonitor International. Country Report, 2016). At the same time, there is a limited range of real Chinese leaf tea in the stores, supermarkets, restaurants or café. A lot of Americans prefer tea in bags and instant tea. It should be noted that such products have nothing common with real leaf tea, because they usually contain artificial additives and other substances, which are not useful for the human health. In this case, the unique feature of “Black & Green” is to sell only leaf/herbal teas, which differ in high quality and healthful properties.
The target audience of the proposed online-store is people, who drink tea in the US, includes a variety of segments of the population: working class families, representatives of ethnic minorities (especially, Asian nations), the quantity of those increases from year to year and others. It should be noted, that online store will pay more attention to people, who live in the big cities, have above average incomes and pay great attention to own health and lifestyle.
Description of proposed products or services
As it is mentioned above, the online-store “Black & Green” specializes in the sales of leaf teas, tea accessories and additional products (tea wrapping and souvenirs). All the range of products will be presented on the website. The initial name of it is www.blackgreen.us. The first level of domain “us” is chosen in order to highlight the location of the online-store in the Internet space and its focus on the US market.
All products will be divided into several groups in order the customers could easily navigate on the website. The main categories of products are the following:
puer tea;
oolong tea;
black tea;
green tea and kuding tea;
red tea;
ginger tea;
mixing herbal tea;
Japanese tea.
Additional category includes gift tea sets, natural slimming tea and tea utensils and wrapping. The assortment range of the online-store divided into several price categories: from middle prices to quite expensive and unique products. The low price segment is not presented in the online-store, because its niche is presented by the huge number of competitors. The online-store plans to provide delivery of all orders throughout the country.
Organization and management descriptions
The desired business form is the sole proprietorship. It is the basic organizational and legal form of business in the US (Business Forms, 2016). The costs of registration are minimal. In two years the staff of the online store can be extended by 4 employees:
the sole owner, who is responsible for negotiations with the suppliers;
two website administrators, who work remotely via online panel and are in charge of receiving and processing orders of clients;
one marketing specialist, who must actively promote the online-store in the Internet space and find partners in the context of joint marketing activities.
At the same time, the initial team of the online-store can consist of one administrator and directly sole owner. All other services (development and design the website, SEO-optimization, delivery of orders) is based on the cooperation of the online store with other companies.
The main process of the online store is the well-established process of receiving orders by the administrator. The scheme of this process is presented in the figure 2.
The architecture of the website assumes providing simple and intuitive user interface and effective and easy management of orders by administrators throughout the following features:
an unlimited number of categories and products, which can be presented on the website;
an unlimited number of products in each category on the website;
an unlimited number of subcategories in each category;
automatic updates of prices in accordance with the official exchange rates;
automatic recalculation of prices from one currency to another (if the client wants to compare prices in different currencies);
possibility to manage customer groups;
control of prices, and discount management;
management of information pages and banners;
set up mailing list manager;
an unlimited number of properties of the goods, for example (taste, smell, required water temperature, infusion time of maturation, etc.);
automatic account balance of goods in stock;
the ability to order products, which are ended;
related products;
recommended products;
feedback form for customers.
One of the main features of the online-store, which allows to analyze sales and offer customers additional goods and special discounts, is the personal account on the site that can be connected with any customer’s profile in the social networks. Opportunities for registered online shoppers on the http://blackgreen.us/ include the following:
ability to see the history of orders, as well as the current status of orders;
ability to form gift sets and deliver them as a souvenir to relatives, friends, colleagues throughout the country (such service can be confirmed by the photo report);
customers can subscribe to the newsletter online store;
a temporary shopping cart for guests and permanent shopping cart for regular customers;
quick search and advanced search;
reviews on products to share customer experience;
customer surveys;
lists of sales the hits, for example: 10, 20, 30 best-selling products;
visual navigation line for moving the site;
availability of coupons and certificates for future purchases.
The pricing in the online-store is an extremely important part and it is managed by the following principles:
achieving the necessary profitability of the enterprise;
loyal prices for current customers;
individual approach to new customers;
compliance with the quality of product for its price;
regular analysis of the product competitiveness compared to other offerings in the market.
Thus, one can say that the proposed organization of the online-store “Black & Green” is quite functional and user-friendly, both in terms of the buyer and the order process, and from the point of view of its administrative control. However, it is worth noting that the successful operation of an online store is also largely dependent on the SEO-promotion that includes PPC advertising, social networking features for active users, banners and other kinds of marketing activity.
Marketing strategy
The motto of the online store is: “You are what you drink”. The range of products, which will be presented in the online-store, are the natural and differ in the high quality. The marketing strategy of the start-up includes the development of the following directions:
internal search engine optimization of the website;
external search engine optimization of the website;
promotion on the different online-platforms, сontexе advertisement (AdWords, Yandex);
own blog on the website, which aims to increase popularity of traditional leaf tea among people and shows the modern health and wellness trends;
expanding the range of products that can be ordered online,
an increasing number of fee-based services within the online-store “Black & Green” (tasting of tea drinks, advice on the choice of tea, mixing tea, forming gift tea sets and others.);
development and launch of online users assess the quality of products of the online-store (evaluation of technical support, convenience of the user interface, information relevance, etc.).
The main marketing activity is the promotion of the online-store on the Internet, which includes SEO-optimization and online advertising. SEO is a constant working on the optimization of web pages “Black & Green”, increasing the number of links to this site, positioning for different keywords on the search engines, analysis of market and continuous site monitoring. Website promotion of “Black & Green” on search engines consists of several stages.
The first stage is the preliminary technical analysis of the site to determine its readability for search engines and user-friendliness (or usability). The second stage assumes the market research and selection of the most relevant and competitive keywords in the tea industry. The third step includes the recommendations and work to optimize the code elements (meta tags, title element, the contents of the website, manual and automatic registration in major search engines). The last stage assumes the monthly service, which includes increasing the number of links to the online-store, link exchange, positioning the pages for different keywords, monitoring the position in the search engines, expert consultations. In addition, online advertising includes banners, contextual advertising and PPC activity. Thus, implementing the marketing strategy of the start-up needs constant financing.
Financial management
The proposed start-up is based on the following expanses:
the costs of the online activities;
the cost of off-line activities;
constant monthly expenses.
According to the current business plan, it is not required the individual office space needs, storage or dedicated web server for the “quick start” of the online store. It only needs the room in apartments or an additional table in the office room, rental a virtual hosting, and the products can be taken from the warehouses of suppliers and delivered to customers by the courier service. It should be noted that all initial staff can work remotely, but preferably in the same time zone.
The initial expanses for the launching the online store are presented in the table 1.
As we can see, it is required $ 4 007,5 for launching the basis of the start-up (website) and regular month costs are $2 900 in order to support and develop the project. It should be noted that the delivery costs should be included in the overall price of the products, which are presented on the website.
The timetable of the launching the online-store is presented in the appendix A. Detailed calculations are presented in the appendix A. As we can see from it, the design and development of the site will continue first three months (or I quarter). The marketing activity and administrative support start to work from the second quarter.
The main objective of the startup is to reach the positive profit figures in two years. According to the net present value technique, if the total amount of initial investments is around $ 10 000, the approximate project discounted payback period will be approximately 21 months. Thus, the proposed start-up can be considered as quite attractive and promising.
References
Business Forms,. (2016). Sole Proprietorship. The U.S. Small Business Administration | SBA.gov. Sba.gov. Retrieved 22 April 2016, from https://www.sba.gov/starting-business/choose-your-business-structure/sole-proprietorship
Euromonitor International. Country Report.,. (2016). Tea in the US. Euromonitor.com. Retrieved 22 April 2016, from http://www.euromonitor.com/tea-in-the-us/report
Tea Association of the U.S.A. Inc,. (2016). Daily Beverage Guidelines. Teausa.com. Retrieved 22 April 2016, from http://www.teausa.com/14710/daily-beverage-guidelines
Appendix A. Calculation of costs for the “quick start” of the online-store “Black & Green”, $
